- The Goods and Services Tax (GST) Council held its meeting recently.
What are the goods and services whose rates have been increased?
- Based on recommendations made by a Group of Ministers (GoM) led by Karnataka Chief Minister Basavaraj Bommai, the GST Council has scrapped exemptions on several goods and services, done away with concessional rates granted for a few products, and altered tax rates up or down in other cases.
- The Reserve Bank of India expects India’s inflation rate, which hit an eight-year high of 7.8% in April and remained over 7% in May, to average 6.7% in 2022-23.
- The Finance Minister said the Council members were conscious of inflation concerns while approving the rate changes. It is too early to discern the possible impact of the new tax rates on the overall inflation experience and how much of it will be captured in the official data.
- The panel led by Mr. Bommai has been granted three more months to delve into its other mandate that could have a wider impact on consumers and businesses — rationalising the multiple GST rate slabs such as 5%, 12%, 18% and 28% and raising levies to bolster revenues that have fallen short of expectations.
- Part of the reason for dipping revenues, apart from a slowing economy in recent years, was the repeated reduction in several items’ GST rates ahead of critical elections.
- However, officials concede that inflation worries do not make this an opportune time for carrying out broader rate hikes.